Correlation Between TPL Insurance and Agha Steel
Can any of the company-specific risk be diversified away by investing in both TPL Insurance and Agha Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TPL Insurance and Agha Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPL Insurance and Agha Steel Industries, you can compare the effects of market volatilities on TPL Insurance and Agha Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TPL Insurance with a short position of Agha Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPL Insurance and Agha Steel.
Diversification Opportunities for TPL Insurance and Agha Steel
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TPL and Agha is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TPL Insurance and Agha Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agha Steel Industries and TPL Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TPL Insurance are associated (or correlated) with Agha Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agha Steel Industries has no effect on the direction of TPL Insurance i.e., TPL Insurance and Agha Steel go up and down completely randomly.
Pair Corralation between TPL Insurance and Agha Steel
Assuming the 90 days trading horizon TPL Insurance is expected to generate 1.06 times more return on investment than Agha Steel. However, TPL Insurance is 1.06 times more volatile than Agha Steel Industries. It trades about -0.04 of its potential returns per unit of risk. Agha Steel Industries is currently generating about -0.05 per unit of risk. If you would invest 1,540 in TPL Insurance on August 27, 2024 and sell it today you would lose (527.00) from holding TPL Insurance or give up 34.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.67% |
| Values | Daily Returns |
TPL Insurance vs. Agha Steel Industries
Performance |
| Timeline |
| TPL Insurance |
| Agha Steel Industries |
TPL Insurance and Agha Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPL Insurance and Agha Steel
The main advantage of trading using opposite TPL Insurance and Agha Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPL Insurance position performs unexpectedly, Agha Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Agha Steel will offset losses from the drop in Agha Steel's long position.| TPL Insurance vs. Habib Bank | TPL Insurance vs. National Bank of | TPL Insurance vs. United Bank | TPL Insurance vs. MCB Bank |
| Agha Steel vs. Habib Insurance | Agha Steel vs. Ghandhara Automobile | Agha Steel vs. Century Insurance | Agha Steel vs. Reliance Weaving Mills |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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